VoxEU Column Development Poverty and Income Inequality

Inequality of opportunity: Useful policy construct or will o’ the wisp?

Reducing inequality of opportunity, rather than inequality of outcome, is often heralded as an appropriate target for policy. This column explores the challenges of identifying inequality of opportunity. Disentangling how effort and circumstance contribute to outcomes is difficult, and this leads to a tendency to underestimate inequality of opportunity. This lends support for generalised social protection measures in dimensions such as income, health and education, irrespective of whether the outcomes can be specifically attributed to circumstance or to effort.

In policy and political discourse, ‘equality of opportunity’ is the new motherhood and apple pie. It is often contrasted with equality of outcomes, with the latter coming off worse. Equality of outcomes is seen variously as Utopian, as infeasible, as detrimental to incentives, and even as inequitable if outcomes are the result of differing efforts. Equality of opportunity, on the other hand, is interchangeable with phrases such as ‘levelling the playing field’, ‘giving everybody an equal start’ and ‘making the most of inherent talents.’ In its strongest form, the position is that equality of outcomes should be irrelevant to policy; what matters is equality of opportunity.

Inequality of opportunity from inequality of outcome: Why it matters

The idea behind differentiating inequality of opportunity from inequality of outcome is simple yet powerful. Not all inequality of outcome is morally unjust.

  • The bad bit of inequality (‘inequality of opportunity’) is the part that emerges because of factors over which we have no control (our ‘circumstances’).
  • By contrast inequality that emerges because of our different choices and ‘effort’ (holding constant our circumstances) is fine.1

Income inequality due to differential effort should not be the target of policy. By contrast, income differences due to discrimination by race or gender are legitimate targets for redress – they reflect inequality of opportunity.

But can we, in practice, make a clean separation between inequality of opportunity and inequality of outcome?2 Our outcomes do, of course, reflect our own effort and decisions. But they also reflect other people’s effort and decisions, and we have little if any control over these. The outcome of an infant reflects entirely the efforts and decisions of her parents, but she has no choice in who her parents are. That means that all inequality in immunisation coverage, for example, is unjust. For outcomes relating to small children we don’t need to get into a complicated exercise to figure out the share of inequality of opportunity in total inequality – it’s 100%.

As a child moves through infancy into childhood, parental influences diminish, but they don’t cease – our parents’ choices and efforts shape the way we think and behave, right through to adulthood in fact. And other people’s actions start to affect the choices and efforts that a child makes – their teachers and their classmates. Because children don’t select teachers or classmates, the choices and efforts of these people ought surely to be listed among the circumstances over which the child has no control.

Most outcomes also reflect luck. To be sure luck would belong alongside effort if we could eliminate risk from our lives and choose not to do so. But we cannot. Much of the risk we are exposed to is linked to activities we have to engage in to get through the day, if not survive.3 Often the risks involved are not known with certainty by the scientific community; when they are known, they are not always disseminated in an accessible way, and there are commercial pressures to ignore them. Diet is a good example. We have to eat to survive. Yet dietary risks account for more deaths worldwide than alcohol and tobacco combined. Commercial pressures encourage a default diet that poses risks to health, and we have to make a conscious and determined effort to eat in a way that lowers health risks.

True there are examples where people unnecessarily and knowingly expose themselves to risk. Shouldn’t inequalities in health caused by smoking decisions be classified as just? Not necessarily. There is a school of thought that says that people should not be held accountable for bad luck but only for unnecessary fully-informed risky behaviours. That might mean taxing tobacco at a rate that generates enough revenue to cover the extra expected health care costs, but making sure that everyone – smokers and non-smokers – receive whatever health care they need to prolong their life and increase its quality.

Like luck, talents play a big role in shaping outcomes. We can think of ourselves as starting life endowed with innate talents, which we can cultivate during our life. The talents we start our life with affect where we end up. We’re unlikely to become an accomplished concert pianist if we start life with no musical talent. Since we have no control over our innate talents, lumping all talent with effort leaves us underestimating the true amount of inequality of opportunity.

Concluding remarks

Any attempt to separate circumstances from effort – to identify that portion of the inequality of outcomes which is a legitimate target for redistribution – is fraught with empirical and conceptual difficulties.4 Fine-grained distinctions between inequality of opportunity and inequality of outcomes do not hold water in practice, and we are likely to greatly underestimate inequality of opportunity and hence the need for intervention.

Further, what if one person’s effort becomes another person’s circumstance, as when income generated through parents’ effort provides a better start in life for some children? Or when freely made choices by one group of upper-income house buyers push up prices for others who may have lower incomes? Is it legitimate or is it not legitimate to intervene in this case?

These arguments support the case for generalised social protection in dimensions such as income, health and education, irrespective of whether the outcomes can be specifically attributed to circumstance or to effort.

The important questions then relate to what the best available policy instruments are for delivering this social protection, what effects they have on incentives, and how best they can be deployed. To be sure, we may make some Type I and Type II errors in doing so; we may penalize effort when we should not, and we may not fully compensate for circumstances when we should. But this is preferable to being frozen into perpetually underestimating the need for intervention by a focus on that will o’ the wisp, inequality of opportunity.

References

Dworkin, R (1981a) "What is equality? Part 1: Equality of welfare", Philosophy and Public Affairs, 10: 185-246.

Dworkin, R (1981b) "What is equality? Part 2: Equality of resources", Philosophy and Public Affairs, 10: 283-345.

Ferreira, Francisco and Vito Peragine (2015) “Individual responsibility and equality of opportunity” in M Adler and M Fleurbaey (eds), Handbook of Well Being and Public Policy, Oxford University Press.

Kanbur, R and A Wagstaff (2015) “How useful is inequality of opportunity as a policy construct?”, CEPR Discussion Paper 10508, March.

Paes de Barros, R, F H G Ferreira, J R M Vega, J C Saavedra, M De Carvalho, S Franco, S Freije-Rodriguez and J Gignoux (2009), Measuring Inequality of Opportunities in Latin America and the Caribbean, Washington DC, World Bank.

Roemer, J E (1998) Equality of Opportunity, Cambridge, MA, Harvard University Press.

Footnotes

1 The terminology of ‘circumstance’ and ‘effort’ was introduced by Roemer (1998). Earlier writings include the seminal contribution by the philosopher Ronald Dworkin (1981a, b).

2 The arguments in this posting are developed in greater detail in Kanbur and Wagstaff (2015).

3 ‘Brute luck’ and ‘option luck’ are terms introduced by Dworkin (1981) to distinguish between risks over which we have no control or some control.

4 The study by Paes de Barros et al (2009) is an example of such a quantitative study which has become influential and on which subsequent studies have been patterned. For a recent review see Ferreira and Gignoux (2015).

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